ElEvEnth Edition as wEll as instructor and studEnt rEsourcEs, visit coMpEnsation, 11th Edition, onlinE at www.MhhE.coM/Milkovich11E compensation For MorE inForMation aBout this Book ElEvEnth Edition JErry nEwMan Barry GErhart MD DALIM 1215015 11/5/12 CYAN MAG YELO BLACK Milkovich | nEwMan | GErhart GEorGE Milkovich miL2949x_fm_i-xviii.indd Page i 12/1/12 11:15 AM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Compensation Eleventh Edition George T. Milkovich Cornell University Jerry M. Newman State University of New York– Buffalo Barry Gerhart University of Wisconsin–Madison miL2949x_fm_i-xviii.indd Page ii 06/12/12 3:21 PM user-f499 /201/MH01590/bar26215_disk1of1/0073526215/bar26215_pagefiles COMPENSATION, ELEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020 Copyright © 2014 by The McGraw-Hill Companies, Inc All rights reserved Printed in the United States of America Previous editions © 2011, 2008, and 2005 No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper DOC/DOC ISBN MHID 978-0-07-802949-3 0-07-802949-X Senior Vice President, Products & Markets: Kurt L Strand Vice President, Content Production & Technology Services: Kimberly Meriwether David Vice President, General Manager: Brent Gordon Publisher: Paul Ducham Sponsoring Editor: Michael Ablassmeir Marketing Manager: Elizabeth Trepkowski Development Editor: Andrea Heirendt Director, Content Production: Terri Schiesl Project Manager: Mary Jane Lampe Buyer: Nicole Birkenholz Media Project Manager: Prashanthi Nadipalli Cover Designer: Studio Montage, St Louis, MO Typeface: 10/12 Times Compositor: Aptara®, Inc Printer: R R Donnelley All credits appearing on page or at the end of the book are considered to be an extension of the copyright page Library of Congress Cataloging-in-Publication Data Milkovich, George T Compensation / George Milkovich, Jerry Newman, Barry Gerhart.—11th ed p cm ISBN 978-0-07-802949-3 (alk paper)—ISBN 0-07-802949-X (alk paper) Compensation management I Newman, Jerry M II Gerhart, Barry A III Title HF5549.5.C67M54 2014 658.3'2—dc23 2012040180 The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill, and McGraw-Hill does not guarantee the accuracy of the information presented at these sites www.mhhe.com miL2949x_fm_i-xviii.indd Page iii 12/13/12 7:31 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Table of Contents Preface xiii Your Turn: The Role of Labor Costs in the Retail Electronics and Airline Industries 27 PART ONE Chapter Strategy: The Totality of Decisions INTRODUCING THE PAY MODEL AND PAY STRATEGY Chapter The Pay Model Similarities and Differences in Strategies Society Stockholders Managers Employees 11 Incentive and Sorting Effects of Pay on Employer’s Behaviors 11 Global Views—Vive la Différence 12 13 Cash Compensation: Base 14 Cash Compensation: Merit Pay/Cost-of-Living Adjustments 14 Cash Compensation: Incentives 15 Long-Term Incentives 15 Benefits: Income Protection 16 Benefits: Work/Life Balance 16 Benefits: Allowances 16 Total Earnings Opportunities: Present Value of a Stream of Earnings 17 Relational Returns from Work 17 A Pay Model 18 Compensation Objectives Four Policy Choices 21 Pay Techniques 23 38 Different Strategies within the Same Industry 41 Different Strategies within the Same Company 41 Compensation: Does It Matter? (or, “So What?”) Compensation: Definition, Please Forms of Pay 38 19 Book Plan 24 Caveat Emptor—Be an Informed Consumer Is the Research Useful? 25 Does the Study Separate Correlation from Causation? 26 Are There Alternative Explanations? 26 Strategic Choices 42 Support Business Strategy 43 Support HR Strategy 45 The Pay Model Guides Strategic Pay Decisions 46 Stated versus Unstated Strategies 47 Developing a Total Compensation Strategy: Four Steps 48 Step 1: Assess Total Compensation Implications 49 HR Strategy: Pay as a Supporting Player or Catalyst for Change? 49 Step 2: Map a Total Compensation Strategy 52 Steps and 4: Implement and Reassess 55 Source of Competitive Advantage: Three Tests 55 Align 55 Differentiate 55 Add Value 56 “Best Practices” versus “Best Fit”? 57 Guidance from the Evidence 57 Virtuous and Vicious Circles 58 Your Turn: Merrill Lynch 59 Still Your Turn: Mapping Compensation Strategies 61 PART TWO INTERNAL ALIGNMENT: DETERMINING THE STRUCTURE 25 Chapter Defining Internal Alignment Jobs and Compensation 71 72 iii miL2949x_fm_i-xviii.indd Page iv 12/1/12 11:15 AM user-f502 iv /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Table of Contents Compensation Strategy: Internal Alignment Supports Organization Strategy Supports Work Flow 73 Motivates Behavior 74 72 73 Structures Vary among Organizations 74 Number of Levels 75 Differentials 75 Criteria: Content and Value 75 What Shapes Internal Structures? 78 Economic Pressures 78 Government Policies, Laws, and Regulations 79 External Stakeholders 79 Cultures and Customs 80 Organization Strategy 80 Organization Human Capital 81 Organization Work Design 81 Overall HR Policies 81 Internal Labor Markets: Combining External and Organization Factors 82 Employee Acceptance: A Key Factor 83 Pay Structures Change 83 Strategic Choices in Designing Internal Structures 84 Tailored versus Loosely Coupled 84 Hierarchical versus Egalitarian 84 Guidance from the Evidence 86 Equity Theory: Fairness 86 Tournament Theory: Motivation and Performance 88 Institutional Model: Copy Others 89 (More) Guidance from the Evidence 90 Consequences of Structures 91 Efficiency 91 Fairness 91 Compliance 91 Your Turn: So You Want to Lead an Orchestra! 92 Still Your Turn: (If You Don’t Want to Lead the Orchestra ) 93 Chapter Job Analysis Structures Based on Jobs, People, or Both 101 Job-Based Approach: Most Common 103 103 105 Job Data: Identification 105 Job Data: Content 105 Employee Data 107 “Essential Elements” and the Americans With Disabilities Act 110 Level of Analysis 111 How Can the Information Be Collected? 112 Conventional Methods 112 Quantitative Methods 112 Who Collects the Information? 114 Who Provides the Information? 114 What about Discrepancies? 115 Job Descriptions Summarize the Data 116 Using Generic Job Descriptions 116 Describing Managerial/Professional Jobs Verify the Description 117 Job Analysis: Bedrock or Bureaucracy? Job Analysis and Globalization 120 116 119 Job Analysis and Susceptibility to Offshoring 120 Job Analysis Information and Comparability across Borders 122 Judging Job Analysis 122 Reliability 122 Validity 123 Acceptability 123 Currency 123 Usefulness 123 A Judgment Call 124 Your Turn: The Customer-Service Agent 125 Chapter Job-Based Structures and Job Evaluation 134 Job-Based Structures: Job Evaluation 135 Defining Job Evaluation: Content, Value, and External Market Links 136 Content and Value 136 Linking Content with the External Market Technical and Process Dimensions 137 100 Why Perform Job Analysis? Job Analysis Procedures 104 What Information Should Be Collected? “How-To”: Major Decisions 137 Establish the Purpose 138 Single versus Multiple Plans 138 136 miL2949x_fm_i-xviii.indd Page v 12/13/12 7:31 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Table of Contents Choose among Job Evaluation Methods Job Evaluation Methods 140 141 Ranking 141 Classification 142 Point Method 144 PART THREE Who Should Be Involved? EXTERNAL COMPETITIVENESS: DETERMINING THE PAY LEVEL 155 The Design Process Matters 156 The Final Result: Structure 157 Balancing Chaos and Control 158 Your Turn: Job Evaluation at Whole Foods 159 Chapter Person-Based Structures Chapter Defining Competitiveness Control Costs and Increase Revenues 208 Attract and Retain the Right Employees 210 167 Types of Skill Plans 168 Purpose of the Skill-Based Structure “How-To”: Skill Analysis 168 171 172 What Information to Collect? 172 Whom to Involve? 173 Establish Certification Methods 173 Outcomes of Skill-Based Pay Plans: Guidance from Research and Experience 175 Person-Based Structures: Competencies 176 Defining Competencies 179 Purpose of the Competency-Based Structure 180 “How-To”: Competency Analysis 181 One More Time: Internal Alignment Reflected in Structures (Person-Based or Job-Based) 187 Administering and Evaluating the Plan 189 Reliability of Job Evaluation Techniques Validity 191 Acceptability 192 193 192 What Shapes External Competitiveness? Labor Market Factors 213 How Labor Markets Work Labor Demand 216 Marginal Product 216 Marginal Revenue 217 Labor Supply 218 213 215 Modifications to the Demand Side 218 Compensating Differentials 219 Efficiency Wage 220 Sorting and Signaling 221 Modifications to the Supply Side (Only Two More Theories to Go) 222 Objective 182 What Information to Collect? 182 Whom to Involve? 184 Establish Certification Methods 185 Resulting Structure 185 Competencies and Employee Selection and Training/Development 185 Guidance from the Research on Competencies 187 Bias in Internal Structures 207 Compensation Strategy: External Competitiveness 208 Person-Based Structures: Skill Plans Wages Criteria Bias The Perfect Structure 194 Your Turn: Climb the Legal Ladder 195 189 Reservation Wage 222 Human Capital 223 Product Market Factors and Ability to Pay 223 Product Demand 223 Degree of Competition 224 A Different View: What Managers Say 224 Segmented Supplies of Labor and (Different) Going Rates 225 Organization Factors 226 Industry and Technology 226 Employer Size 226 People’s Preferences 227 Organization Strategy 227 Relevant Markets 228 Defining the Relevant Market 228 Globalization of Relevant Labor Markets: Offshoring and Outsourcing 229 v miL2949x_fm_i-xviii.indd Page vi 12/13/12 7:50 PM user-f463 /Volumes/201/MH01864/per28981_disk1of1/0078028981/per28981_pagefiles vi Table of Contents Competitive Pay Policy Alternatives 232 What Difference Does the Pay-Level Policy Make? 232 Pay with Competition (Match) 232 Lead Pay-Level Policy 234 Lag Pay-Level Policy 234 Different Policies for Different Employee Groups 235 Not by Pay Level Alone: Pay-Mix Strategies 235 Consequences of Pay-Level and -Mix Decisions: Guidance from the Research 240 Efficiency 240 Fairness 241 Compliance 241 282 From Policy to Practice: Grades and Ranges 282 Why Bother with Grades and Ranges? 282 Develop Grades 283 Establish Range Midpoints, Minimums, and Maximums 283 Overlap 284 Flexibility-Control 242 Reconciling Differences 7-A: Utility Analysis 244 Market Pricing Chapter Designing Pay Levels, Mix, and Pay Structures 252 Major Decisions 253 Specify Competitive Pay Policy The Purpose of a Survey 254 285 287 Balancing Internal and External Pressures: Adjusting the Pay Structure 288 Appendix 253 Adjust Pay Level—How Much to Pay? 254 Adjust Pay Mix—What Forms? 254 Adjust Pay Structure? 254 Study Special Situations 255 Estimate Competitors’ Labor Costs 255 Select Relevant Market Competitors Fuzzy Markets Choice of Measure 281 Updating 281 Policy Line as Percent of Market Line From Policy to Practice: Broad Banding Your Turn: Two-Tier Wages Design the Survey From Policy to Practice: The Pay-Policy Line 281 255 259 260 Who Should Be Involved? 260 How Many Employers? 260 Which Jobs to Include? 263 What Information to Collect? 265 Interpret Survey Results and Construct a Market Line 268 Verify Data 269 Statistical Analysis 274 Update the Survey Data 276 Construct a Market Pay Line 276 Setting Pay for Benchmark and Non-Benchmark Jobs 278 Combine Internal Structure and External Market Rates 280 288 288 Business Strategy (More Than “Follow the Leader”) 289 Review 290 Your Turn: Google Evolving Pay Strategy 291 Still Your Turn: Word-of-Mouse: Dot-Com Comparisons 292 PART FOUR EMPLOYEE CONTRIBUTIONS: DETERMINING INDIVIDUAL PAY Chapter Pay-for-Performance: The Evidence 302 What Behaviors Do Employers Care About? Linking Organization Strategy to Compensation and Performance Management 303 What Does It Take to Get These Behaviors? What Theory Says 308 What Does It Take to Get These Behaviors? What Practitioners Say 312 Does Compensation Motivate Behavior? 317 Do People Join a Firm Because of Pay? 317 Do People Stay in a Firm (or Leave) Because of Pay? 318 Do Employees More Readily Agree to Develop Job Skills Because of Pay? 319 Do Employees Perform Better on Their Jobs Because of Pay? 319 miL2949x_fm_i-xviii.indd Page vii 12/1/12 11:15 AM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Table of Contents Designing a Pay-for-Performance Plan 323 Efficiency 323 Equity/Fairness 324 Compliance 325 Your Turn: Burger Boy Chapter 11 Performance Appraisals 371 The Role of Performance Appraisals in Compensation Decisions 372 325 Performance Metrics Chapter 10 Pay-for-Performance Plans 335 What Is a Pay-for-Performance Plan? 335 Does Variable Pay Improve Performance Results? The General Evidence 337 Specific Pay-for-Performance Plans: Short Term 337 Merit Pay 337 Lump-Sum Bonuses 338 Individual Spot Awards 340 Individual Incentive Plans 340 Individual Incentive Plans: Advantages and Disadvantages 343 Individual Incentive Plans: Examples 344 Team Incentive Plans: Types vii 345 Comparing Group and Individual Incentive Plans 351 Large Group Incentive Plans 352 Gain-Sharing Plans 352 Profit-Sharing Plans 357 Earnings-at-Risk Plans 358 Group Incentive Plans: Advantages and Disadvantages 359 Group Incentive Plans: Examples 360 Explosive Interest in Long-Term Incentive Plans 360 Employee Stock Ownership Plans (ESOPs) 362 Performance Plans (Performance Share and Performance Unit) 363 Broad-Based Option Plans (BBOPs) 363 Combination Plans: Mixing Individual and Group 363 Your Turn: Incentives Can Be too Powerful 364 Appendix 10-A: Profit-Sharing (401K) at Walgreens 366 373 Strategies for Better Understanding and Measuring Job Performance 374 The Balanced Scorecard Approach 375 Strategy 1: Improve Appraisal Formats 375 Strategy 2: Select the Right Raters 384 Strategy 3: Understand How Raters Process Information 386 Strategy 4: Training Raters to Rate More Accurately 390 Putting It All Together: The Performance Evaluation Process 391 Equal Employment Opportunity and Performance Evaluation 392 Tying Pay to Subjectively Appraised Performance 396 Competency: Customer Care 397 Performance- and Position-Based Guidelines Designing Merit Guidelines 398 398 Promotional Increases as a Pay-for-Performance Tool 401 Your Turn: Performance Appraisal at Burger King 401 Appendix 11-A: Balanced Scorecard Example: Department of Energy (Federal Personal Property Management Program) 405 11-B: Sample Appraisal Form for Leadership Dimension: Pfizer Pharmaceutical 408 PART FIVE EMPLOYEE BENEFITS Chapter 12 The Benefit Determination Process 428 Why the Growth in Employee Benefits? 430 Wage and Price Controls 430 miL2949x_fm_i-xviii.indd Page viii 12/1/12 11:15 AM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles viii Table of Contents Unions 430 Employer Impetus 430 Cost Effectiveness of Benefits Government Impetus 431 Dental Insurance 477 Vision Care 477 Miscellaneous Benefits 431 The Value of Employee Benefits 431 Key Issues in Benefit Planning, Design, and Administration 433 Benefits Planning and Design Issues Benefit Administration Issues 434 Components of a Benefit Plan 433 437 Employee Benefit Communication Claims Processing 446 Cost Containment 446 Your Turn: World Measurement Chapter 13 Benefit Options 478 Benefits for Contingent Workers 480 Your Turn: Adapting Benefits to a Changing Strategy 480 Employer Preferences 437 Employee Preferences 440 Administering the Benefit Program 478 Paid Time Off During Working Hours Payment for Time Not Worked 478 Child Care 479 Elder Care 479 Domestic Partner Benefits 479 Legal Insurance 479 443 443 PART SIX EXTENDING THE SYSTEM 447 Chapter 14 Compensation of Special Groups Who Are Special Groups? 488 Compensation Strategy for Special Groups 455 Legally Required Benefits 458 Workers’ Compensation 459 Social Security 460 Unemployment Insurance 463 Family and Medical Leave Act (FMLA) 465 Consolidated Omnibus Budget Reconciliation Act (COBRA) 465 Health Insurance Portability and Accountability Act (HIPAA) 465 Retirement and Savings Plan Payments 465 Defined Benefit Plans 466 Defined Contribution Plans 466 Individual Retirement Accounts (IRAs) 468 Employee Retirement Income Security Act (ERISA) 468 How Much Retirement Income to Provide? 470 Life Insurance 471 Medical and Medically Related Payments General Health Care 471 Health Care: Cost Control Strategies 475 Short- and Long-Term Disability 476 487 488 Supervisors 488 Corporate Directors 489 Executives 490 What’s All the Furor over Executive Compensation? What the Critics and Press Say 495 What’s All the Furor over Executive Compensation? What Academics Say 499 Scientists and Engineers in High-Technology Industries 501 Sales Forces 505 Contingent Workers 509 Your Turn: A Sports Sales Plan 510 Chapter 15 Union Role in Wage and Salary Administration 517 The Impact of Unions in Wage Determination 518 471 Union Impact on General Wage Levels 519 The Structure of Wage Packages 521 Union Impact: The Spillover Effect 522 Role of Unions in Wage and Salary Policies and Practices 522 miL2949x_fm_i-xviii.indd Page ix 12/1/12 11:15 AM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Table of Contents Unions and Alternative Reward Systems 527 Lump-Sum Awards 527 Employee Stock Ownership Plans (ESOPs) Pay-for-Knowledge Plans 527 Gain-Sharing Plans 528 Profit-Sharing Plans 528 Your Turn: Predicting a Contract’s Clauses 529 Chapter 16 International Pay Systems 527 MANAGING THE SYSTEM Chapter 17 Government and Legal Issues in Compensation 591 The Global Context 536 The Social Contract 538 Government as Part of the Employment Relationship 593 Centralized or Decentralized Pay-Setting 539 Regulation 540 Culture Demand 593 Supply 593 543 Fair Labor Standards Act of 1938 Culture Matters, but So Does Cultural Diversity 545 Trade Unions and Employee Involvement Ownership and Financial Markets 547 Managerial Autonomy 548 Comparing Costs 549 Labor Costs and Productivity 549 Cost of Living and Purchasing Power Comparing Systems 547 552 555 National Systems: Comparative Mind-Set 555 Japanese Traditional National System 555 German Traditional National System 559 Strategic Comparisons: Traditional Systems in Japan, Germany, United States 560 Evolution and Change in the Traditional Japanese and German Models 562 Strategic Market Mind-Set 564 Localizer: “Think Global, Act Local” 564 Exporter: “Headquarters Knows Best” 564 Globalizer: “Think and Act Globally and Locally” 565 565 Elements of Expatriate Compensation 567 The Balance Sheet Approach 569 Expatriate Systems → Objectives? Quel dommage! 573 Minimum Wage 597 Overtime and Hours of Work Child Labor 604 596 599 Living Wage 604 Employee or Independent Contractor? Prevailing Wage Laws 608 Pay Discrimination: What Is It? 608 The Equal Pay Act 610 555 The Total Pay Model: Strategic Choices Expatriate Pay Borderless World → Borderless Pay? Globalists 574 Your Turn: IBM’s Worldwide Business and Employment Strategies and Compensation 574 PART SEVEN 534 ix 605 Definition of Equal 611 Definitions of Skill, Effort, Responsibility, Working Conditions 611 Factors Other Than Sex 612 “Reverse” Discrimination 612 Title VII of the Civil Rights Act of 1964 and Related Laws 613 Disparate Treatment 614 Disparate Impact 614 Executive Order 11246 614 Pay Discrimination and Dissimilar Jobs 617 Evidence of Discrimination: Use of Market Data 617 Evidence of Discrimination: Jobs of Comparable Worth 618 Earnings Gaps 618 Sources of the Earnings Gaps 620 Differences in Occupations and Qualifications 620 miL2949x_nndx_694-705.indd Page 705 12/1/12 12:13 AM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Name Index Vondra, A., 166 von Hippel, C., 533 Voskuijl, O., 165, 166, 200 Vu, V., 586 Wachter, M., 532 Wade, J., 297 Wagner, L., 453 Wagner, S., 67 Wailes, N., 578, 580 Wakely, J., 166 Waldman, D., 418, 419 Waldman, M., 95 Walker, J., 586 Walker, L., 334 Walker, T., 484 Wallace, M., 199, 201, 513 Wallis, D., 37, 333, 367 Walsh, J., 31, 329, 333, 418 Walsh, M., 128 Walston, S., 671 Walters, M., 531 Wanderer, M., 295 Wang, C., 497 Wang, J., 512 Wang, L., 97 Wang, Z-M., 579 Ward, L., 421–422 Ward, S., 30 Warner, C., 516 Warner, M., 97, 579 Warren, S., 331 Wascher, W., 633 Washkewicz, D., Watson, B., 586 Watson, I., 427 Watson, J., 672 Waugh, S., 423 Wayne, J., 330 Wayne, S., 421 Wazeter, D., 35, 67, 97, 98, 99 Weber, C., 132, 198, 201, 296, 332 Weber, L., 672 Weber, M., 64 Wederspahn, G., 587 Weichselbaumer, D., 638 Weil, J., 418 Weiner, N., 635, 638 Weiss, A., 331, 368 Weiss, D., 197 Weiss, R., 453 Weitzel, W., 673 Welbourne, T., 165, 166, 368, 582 Welch, F., 637 Welch, J., 390 Weldon, W., 491 Weller, I., 33 Wells, R., 65 Welsh, R., 36 Werling, S., 30 Werner, S., 30, 68, 579, 580, 583 Wesson, M., 34, 673 Westphal, J., 515 Wexley, K., 422, 424 Wheeler, A., 422 White, E., 671 White, L., 421 Whitley, R., 580 Whyte, W., 34 Wiarda, E., 249 Wiersma, F., 63 Wigdor, A., 34 Wilay, M., 205 William, S., 331 Williams, G., 340 Williams, K., 231, 421 Williams, M., 97, 236, 249, 452 Williamson, J., 579 Willis, B., 204 Willis, C., 66 Willmott, H., 198 Wills, D., 366 Wilson, A., 131 Wilson, M., 132, 200, 674 Wilson, T., 344, 367 Windrum, P., 582 Wine, B., 330 Winfrey, O., 203 Wingerup, P., 587 Wingfield, N., 370 Winkler, R., 297 Winstall, T., 231 Winstanley, D., 422 Winter-Ebmer, R., 638 Wiseman, R., 30, 35, 68, 514 Wisper, L., 578 705 Wolf, M., 121 Wong, C-S., 331 Wood, C., 424 Wood, R., 637 Woodman, R., 423 Woods, T., 203, 462, 512 Woodyard, C., 30, 209 Worstall, T., 31, 584 Wrege, B., 204 Wright, B., 121 Wright, C., 17, 204 Wright, P., 36, 37, 63, 64, 68, 132, 199, 580, 583, 674 Wu, Y., 97, 637 Wulf, J., 96 Wyatt, W., 248 Wyer, R., 422 Wyman, O., 209 Yanadori, Y., 33, 37, 62, 63, 64, 95, 96, 295, 297, 581 Yang, H., 98 Yeganeh, H., 583 Yoder, M., 31 Youndt, M., 199 Young, S., 513, 514 Younger, J., 674 Yuan, F., 423 Zaidi, M., 673 Zalusky, J., 533 Zardkoohi, A., 34, 673 Zatzick, C., 421 Zedeck, S., 423 Zellner, W., 370 Zenger, T., 331 Zhang, L., 584 Zhao, Z., 579 Zhou, J., 579, 584 Zhou, X., 95, 132 Zimmerman, A., 481 Zimmerman, R., 33 Zingheim, P., 67, 199, 330, 331 Zoghi, C., 36 Zoia, D., 251 Zucker, L., 99 Zupan, N., 579, 583 miL2949x_sndx_706-718.indd Page 706 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index ABC News, 602 Ability, 11 Ability to pay, 221, 648 Acceptability of job analysis, 123 of job evaluation techniques, 192 Access discrimination, 608, 610 Across-the-board increase, 315 Adam Opel AG, 559 Administrative cost containment, 446 Administrative employees, 600 AES, 667 Affirmative defense, 610–611 Affordable Health Care Act of 2010, AFL-CIO, 498, 517, 528 AFSCME v State of Washington, 618 Age Discrimination in Employment Act (ADEA) of 1967, 594, 613, 644 Agency theory, 230, 311, 500 Airline industry bankruptcy in, 28 benefit costs in, 647 effect of terrorism and gas prices on, 520 labor costs in, 27–28, 210 Alcatel-Lucent Technologies, 392 Alcoa, 464 Alignment See Internal alignment Allowances for expatriates, 567–569 explanation of, 16–17 in Germany, 560 in Japan, 558–559 Alternation ranking, 141, 376 Amazon, 7, 213 American Airlines, 28, 520 American Association for Retired Persons (AARP), 646 American Compensation Association (ACA), 386 American Federation of State, County and Municipal Employees (AFSCME), 618, 627 American Steel and Wire, 158 Americans with Disabilities Act (ADA) of 1990, 110–111, 594, 613 AmeriSteel, 358, 359 AMO theory, 45 706 AMR, 520 Apache Footware, 236 Appeals process, job evaluation, 154, 156 Appraisals See Performance appraisals AT&T, 318 Automatic progression, 524 Avaya, Inc., 445 Balanced scorecard approach to performance appraisals, 375, 405–407 to variable pay, 349–350 Balance sheet approach alternatives to, 570–571 explanation of, 569–570 modified, 571–572 Balzer Tool Coating, 170 Bank of America, 5, 38, 40, 59, 60, 539 Bankruptcy, 28 Baogang, 535 Base pay explanation of, 221, 267, 315, 492 in Germany, 559 in Japan, 556–557 variable by, 336 Base salary, 491, 492, 647–648 Base wages, 14, 213, 494 Bear Stearns, 5, Bedeaux plans, 342 Behavioral competency indicators, 179 Behaviorally anchored rating scales (BARS), 377, 378 Bell Canada, 625 Benchmark conversion/survey leveling, 265 Benchmark jobs characteristics of, 139–140 in job surveys, 263–265 setting pay for, 278–279 Benefit ceiling, 447 Benefit cutbacks, 447 Benefits See Employee benefits Benefitslink, 434 Best Buy, 27–28 Best-pay practices, 57 Bias, 192–193 Blue Cross, 472 Boeing, 464 Bonuses executive, 492–493 in Germany, 559–560 in Japan, 558 lump-sum, 315, 327, 338–339 Bourse market, 213 Bristol-Meyers Squibb, 15 Brito v Zia Company, 394–395 Broad banding explanation of, 285–287 flexibility and, 287–288 Broad bands, 655 Broad-based option plans (BBOPs), 363 Bureau of Labor Statistics (BLS), 261–263, 519, 608 Burger King, 401–403 Business strategies competitive dynamics and, 49 function of, 43–45 market pricing and, 289–290 tailored vs loosely coupled, 84 Cafeteria-style plans, 308, 435, 442, 572 Call centers, 230 Canada, 625 Capital appreciation plans, 493–494 Capital One Bank, 7–8 Career path, 90 Cash balance plans, 467–468 Cash compensation base wage as, 14 controlling average, 647–648 incentive payment as, 15 limits on, 21 merit pay and cost-of-living adjustments as, 14–15 Cash profit sharing, 349 Caterpillar, 464 Celebrity earnings, 203–205 Central tendency, 274–275 Central tendency error, 388 Cerberus Capital Management, 535 Certification methods, 173, 175 miL2949x_sndx_706-718.indd Page 707 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index “Change-and-congeal” process, 83 Chief executive officers (CEOs) See also Executive compensation base salary for, 492 bonuses for, 492–493 compensation for, 7–9, 489–492 long-term incentive and capital appreciation plans for, 493–494 perquisites for, 495 views of, 495–501 Child care, 479 Child labor, 604 China allowance for foreign employees in, 16–17 automobile industry in, 534–535 compensation trends in, 12, 535–536 labor costs in, 549 national culture in, 546–547 outsourcing to, ownership trends in, 547–548 political environment and, 51 productivity in, 549 Chrysler, 4, 535 Churn, 649 Circuit City, 27–28 Civil Rights Act of 1991, 594 Civil Rights Act of 1964, Title VII, 592, 594, 609, 613, 617 Civil service employees, 520–521 Claims processing, 446 Classification method, job evaluation, 142–144 Clawbacks, 595 Clone error, 388 Coca-Cola, 490, 493 Co-determination, 542 Coinsurance, 447 Colgate, 252 Collective bargaining agreements See also Labor unions basis of pay and, 522–523 experience and merit differentials and, 524–525 occupations and wage differentials and, 524 vacations and holidays and, 525–526 wage adjustment provisions in, 526 Combination plans, 363 Commission, 15 Committee a priori judgment approach, 154 Communication employee benefit, 443–446 pay, 659–664 Communication Workers of America (CWA), 627 Community rating, 472 Companies See Organizations Comparable worth Canada and, 625 explanation of, 610, 618 labor unions and, 627–628 Comparable-worth plans, 626–627 Compa-ratios, 655–656 Compensable factors to be included in point plan, 151 explanation of, 144–146 method to determine, 145–150 Compensating differentials, 219–220 Compensation See also Executive compensation; Expatriate compensation; International compensation; specific forms of compensation based on performance appraisals, 396–400 benefits as, 16–17 cash, 14–15, 21, 647–648 categories of, 13–14 as change agent, 665–666 contingent workers, 509–510 for corporate directors, 489–490 deferred, 467 direct, 435 employers’ perspective on, 11 explanation of, 12, 13 fairness in, 19 for financial services professionals, 4–5, global views of, 12–13 incentive and sorting effects of, 11–12 incentives as, 4–5, 15 indirect, 450 international context of, 536, 537 long-term incentives as, 15 management of, 23, 58 managers’ perspective on, 9–11 measures of, 267 objectives of, 19–21 overview of, 4–5 publicly available data on, 261–262 relational returns from work as, 17 707 Compensation—Cont for sales forces, 505–508 for scientists and engineers, 501–505 societal perspective on, 5–7 stockholders’ perspective on, 79 for supervisors, 488–489 total, 13, 213, 214, 267–268, 641 total earnings opportunities as, 17 union effect on, 52, 518–526 variations in, 69 Compensation communication cycle, 662–664 Compensation forecasting, 652–653 Compensation management average cash compensation and, 647–648 bottom-up budgeting and, 652–653 centralization-decentralization and, 666–667 communication and, 659–665 of compensation system, 23 embedded controls and, 654–659 ethics and, 653–654 flexibility and, 667, 668 hours of work and, 646 influence of compensation on, 9–11 nature of, 641–642 number of employees and, 642–646 pay decisions by, 224–225 reengineering and outsourcing and, 667–668 strategic change and, 665–666 top-down budgeting and, 648–651 view of labor unions, 517–518 Compensation software, 659 Compensation strategies See also Executive compensation assessing total compensation implications to develop, 49–52 best practices vs best fit and, 57 choice in, 51–52 comparison of, 38–40 competitive advantage and, 55–57 culture and values and, 50 employee preferences and, 51 external competitiveness and, 208–213 implementation and assessment of, 55 internal alignment and, 72–77 mapping of, 52–54 at Merrill Lynch, 59–61 miL2949x_sndx_706-718.indd Page 708 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles 708 Subject Index Compensation strategies—Cont pay model and, 46–48 performance measures and, 305–306 research on, 57–58 within same company, 41–42 within same industry, 40–41 social and political context and, 50–51 steps to develop, 48–55 virtuous and vicious circles and, 58–59 Compensatory time off, 604 Competencies classification of, 182 elements of, 179–180 employee selection and training and development and, 185, 187 explanation of, 176–177 indicators of, 177–179 leadership, 183 list of top, 184 research on, 187 Competency-based pay system, 89 Competency-based structures certification methods for, 185 employee selection and training and development in, 185, 187 explanation of, 177–178 features of, 194 individuals involved in, 184–185 information to collect for, 182–184 objectives of, 182 purpose of, 180–181 Competition, degree of, 224 Competitive advantage compensation strategies and, 55–57 pay-level policies and, 241 Competitive intelligence, 255 Competitiveness See External competitiveness Compliance explanation of, 19 internal alignment and, 91–92 in pay-for-performance plans, 325 pay-level and pay-mix decisions and, 241–242 Computer employees, 601 ConAgra Foods, 492 Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, 465 Consumer Directed Health Plans (CDEHP), 474, 475 Consumer Price Index (CPI), 276, 650–651 Content explanation of, 75, 136 external market and, 136 Contingent workers benefits for, 480 compensation for, 509–510 conflicts faced by, 489 explanation of, 509 Contract system, 640–641 Copay, 446 Core employees, 644–645 Corning Glass, 360 Corporate directors, 489–490 Correlation coefficient, 26 Costco, 9, 10 Cost containment employee benefit, 446, 447 point plans and, 147 Cost cutters, 43–44 Cost of living adjustments for, 315 explanation of, 649–651 international comparisons of, 552–555 Cost-of-living adjustments (COLAs), 15, 526 Criterion contamination, 387–388 Criterion deficient, 373 Criterion pay structure, 154 Cultural dimensions (Hofstede), 544–546 Cultural diversity, pay structure and, 80 Culture See also Organizational culture compensable factors and, 147 compensation strategy and, 14, 50, 543–545 explanation of, 80 Currency conversions, 559 Customer-driven health care, 435 Customer-focused business strategy, 44 Customers commitments to, 397 as performance raters, 385–386 DaimlerChrysler, 535 Data behavioral-based, 109 employee, 107–110 job, 105, 107 publicly available, 261–262 task, 107, 108 verification of, 269–274 Data collection for job analysis, 105, 107, 112–115 methods for, 112–115 quantitative, 112, 114 for skill analysis, 172–173 Davis-Bacon Act of 1931, 594, 608 Deductibles, 447 Deferred compensation, 467 Deferred wage increases, 526 Defined benefit plans, 447, 466 Defined contribution plans, 447, 466–468 Delayering, 81 Delphi Corporation, 527 Delta Air Lines, 230 Dental insurance, 477 Denver Classroom Teachers Association, 52 Denver Public Schools, 52 Department of Energy, U.S., 405–407 Department of Labor, U.S., 599, 602, 606, 611 Dewey & LeBoeuf, 195–196 Differentials, 75 Digital Equipment Corporation, 446 Direct compensation, 435 Disability insurance, 476–477 Discrimination access, 608, 610 legislation addressing, 613–616 pay, 148, 591–592, 608–613, 617–618 reverse, 612–613 valuation, 610 Disparate impact, 614 Disparate treatment, 614 Distributive justice explanation of, 83 pay-for-performance plans and, 324 Dodd-Frank Wall Street Reform and Consumer Protection Act (2010), 8–9, 80, 493, 595 Domestic partner benefits, 473 Dow Chemical Company, 381 Dual-career ladder, 502, 504 Dual coverage, 447 DuPont Fibers, 360 Earnings celebrity, 203–205 educational attainment and, 622–623 present-value stream of, 17 Earnings-at-risk plans, 358–359 miL2949x_sndx_706-718.indd Page 709 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index Earnings gaps See also Pay discrimination background of, 618–620 discrimination and, 624–625 global nature of, 625 in industries and firms, 623–624 occupation and qualification differences and, 620–623 sources of, 620, 621 union membership and, 624 Eastman Kodak, 468 Eaton, 14, 666 E-benefits, 445 Economic crisis of 2008–2010, 498 Economic forces explanation of, 78–79 in Japan, 562 sales personnel and, 508 Economic Growth and Tax Relief Reconciliation Act of 2001, 469 Educational attainment, 622–623 Efficiency explanation of, 91 German pay systems and, 559 of pay-for-performance plans, 323–324 pay-level and pay-mix decisions and, 240–241 Efficiency wage, 219–221 Egalitarian pay structure, 84–86 Elder care, 479 Electronics industry, 27–28 Embedded controls compa-ratios and, 655–656 cost analysis and, 656–657 explanation of, 654 promotions and external vs internal hires and, 655 range minimums and maximums and, 654–655 value-added analysis and, 657–659 variable pay and, 656 Emergency Unemployment Compensation program (EUC08), 464 Employee attitude surveys, 192 Employee benefit questionnaires, 442, 443 Employee benefits See also specific types of benefits administration of, 434–437, 443–446 allowances as, 16–17 background of, 428–430 Employee benefits—Cont child care as, 479 communication about, 443–446 components of, 437–440 for contingent workers, 480 cost effectiveness of, 431 costs of, 438–439, 457 domestic partner, 479 elder care as, 479 employee preferences for, 440–442, 456 employer-initiated, 430–431 employer preferences for, 437–440 explanation of, 429 finance methods for, 436 flexible, 435, 436, 442 in Germany, 560 government mandates for, 431 income protection and, 16 in Japan, 558–559 labor unions and, 430 legal insurance as, 479 legally required, 440, 458–465 legislation related to, 441, 465, 468–470 life insurance as, 471 medical and medically related, 471–478 paid time off as, 478 payment for time not worked as, 478–479 planning and design issues related to, 433–434 ranking of, 432 reducing cost of, 646–647 retirement and savings plans as, 465–471 Social Security as, 460–463 types of, 458 unemployment insurance as, 463–464 union effect on, 521–522 value of, 431–433 wage and price controls and, 430 workers’ compensation as, 459–460 work/life balance and, 16 Employee contributions, 22, 57 Employee retention benefits and, 439–440 competitiveness and, 210, 213 Employee Retirement Income Security Act (ERISA) of 1974, 441, 468–470, 606 709 Employees administrative, 600 benefit preferences related to, 440–442 compensation strategies and preferences of, 51 competencies and selection of, 185, 187 computer, 601 contingent, 480, 489, 509–510 core, 644–645 highly compensated, 601 independent contractors vs., 605–607 influence of compensation on, 11, 317–322 labor costs and number of, 642–646 nonexempt, 52, 604 on-call, 603 part-time, 525 pay fairness beliefs of, 83 personal needs of, 442 professional, 600 sales, 489, 505–508, 601 temporary, 525 wage differentials based on experience or merit, 524–525 Employee stock ownership plans (ESOPs), 362–363, 467, 527 Employee turnover compensation and, 318 pay satisfaction and, 234, 235 Employer of choice, 237 Employment Cost Index (ECI), 255 Engineers, compensation for, 501–505 Enron Corp., 20, 361, 467 Entitlement, 11 Entry jobs, 82 Equal, 611 Equal employment opportunity (EEO), 392, 394 Equal Pay Act of 1963 compliance with, 195 function of, 608, 610–611 requirements of, 79, 148, 609, 610 reverse discrimination as violation of, 611–612 Equity employee benefits and, 441–442 in pay-for-performance plans, 324–325 Equity theory, 86–87, 311 Essay format, 381 Essential job elements, 110–111 miL2949x_sndx_706-718.indd Page 710 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles 710 Subject Index Estrada v FedEx Ground Package System, Inc., 606 Ethical issues compensation management and, 653–654 related to compensation, 19–21 European Union (EU), 539, 541, 542, 548, 625 European Union Working Time Directive, 541 Exchange value, 77 Executive compensation base salary and, 492 bonuses and, 492–493 components of, 491 critics’ view of, 495–499 executive benefits and, 495 executive perquisites and, 495, 496 FLSA exemptions for, 600 historical background of, 497 long-term incentive and capital appreciation plans and, 493–494 overview of, 487 regulations related to, 80 stockholders’ interest in, 7–9 strategies for, 490 for top 10 executives in 2011, 491 view of academics about, 499–501 Executive Compensation Disclosure (2010), 596 Executive Order 11246, 594, 609, 614–616 Executive perquisites, 495, 496 Exempt, 14 Exit incentive programs, 644 Expatriate colonies, 568 Expatriate compensation See also International compensation allowances and premiums and, 568–569 balance sheet approach to, 569–572 employee preferences and, 573 explanation of, 567 housing and, 568 salary and, 567–568 taxes and, 568 Expatriates allowances and premiums for, 567–569 explanation of, 565–566 housing for, 568 reasons to select, 566–567 value of experience of, 571 Expectancy theory, 310, 312 Experience rating, 463, 472 Exporter strategy, 564–565 External competitiveness broad banding and, 285–288 compensation strategies and, 57 competitive pay policy alternatives and, 232–239 compliance and, 241–242 consequences of, 240–242 cost controls and increase revenues and, 208–210 demand side modifications and, 218–221 efficiency and, 240–241 employee recruitment and retention and, 210–213 explanation of, 22, 208 fairness and, 241 grades and ranges and, 282–285 labor demand and, 216 labor market and, 213, 215–218 labor supply and, 218 marginal product and, 216–217 marginal revenue and, 217–218 market pricing and, 288–290 organization factors and, 226–228 pay level determination and, 253–280 pay-policy line and, 281–282 pay structure adjustment and, 288 product market factors and ability to pay and, 223–226 relevant markets and, 228–231 supply side modifications and, 222–223 utility analysis and, 244–246 Extrinsic rewards, 320 Factor scales, 152 Fair Labor Standards Act (FLSA) of 1938 compensatory time off and, 604 employee benefits and, 441 exemptions under, 14, 599–601 impact of, 602 income covered in, 603–604 minimum wage and, 597–598 overtime provisions and, 52, 599, 602 professionals under, 501 purpose of, 594, 596–597 work hours covered in, 602–603 Fairness compensation, 19, 83 competencies and, 180–181 equity theory and, 86–87 internal alignment and, 91 in pay-for-performance plans, 324–325 pay-level and pay-mix decisions and, 241 of skill-based structure, 171 Family and Medical Leave Act of 1993, 465, 595 Fannie Mae, 497 Farmers Insurance, 599 FedEx, 468 Financial Accounting Standards Board Statement 123 R, 595 Financial planning, 641 Financial services industry executive compensation in, incentive plans offered in, 4–5 offshoring and, 229–230 social contract and, 538–539 First impression error, 388 Flat rate, 22 Flexible benefit plans, 435, 436, 442 Flexible compensation, 308 FMC, 172–174 Ford, 529 Formal appeals process, 192 401(k) plans, 435, 466–468 Freddie Mac, 497 Free-rider problem, 351 Frequency distribution, 273, 274 Full-defined contribution, 435 Gain sharing, 316, 350 Gain-sharing plans elements in design of, 352–355 explanation of, 346, 352 formulas for, 354 labor unions and, 528 Gantt plans, 343 GE Healthcare, 77 GE Information Systems, 360 Gender See also Women comparable worth and, 625–628 job evaluation and, 192–193 pay discrimination and, 591–592, 608–614 (See also Earnings gaps; Pay discrimination) performance appraisals and, 388–389 Gender equity, 610, 625 miL2949x_sndx_706-718.indd Page 711 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index General Electric, 260, 535, 666, 667 General Mills, 51, 567 General Motors (GM), 4, 52, 242–243, 395, 466, 468, 471, 477–478, 521, 529–530, 534–535 Geographic differentials, 525, 651 Germany allowance and benefits in, 560 base pay in, 559 bonuses in, 559–560 co-determination law in, 542 comparison of systems in United States, Japan, and, 560–562 evolution and change in, 562–564 ownership trends in, 547 glassdoor.com, 292 Global approaches, 565 Globalization, 229–231 See also International compensation Globalizer strategy, 565 Goal setting, 311 Google, 7, 17, 38, 39, 44, 256–257, 291 Government branches of, 592 labor demand and, 593 labor supply and, 593–594 Government-defined prevailing wages, 608 Government regulations age discrimination, 613 child labor, 604 compensation-related, 594–596 compliance with, 628 discrimination on basis of race, color, religion, sex, or national origin, 614–616 disparate impact, 614 disparate treatment, 614 employee benefits, 431, 458–465 employees and independent contractors, 605–607 headcount reduction and, 644 internal structures and, 79 living wage, 604–605 managerial autonomy and, 548 minimum-wage, 597–598 overtime pay and hours of work, 52, 599, 602–604 pay discrimination, 591–592, 608–614, 617–625 prevailing wage laws, 608 social contract and, 540–543 union membership, 624 Grades, 282–285 Griggs v Duke Power Co., 614 Group incentive plans See Team incentive plans Gunther v County of Washington, 617 Halo error, 388 Halsey 50-50 plans, 343 Hay Group Guide Chart - Profile Method, 149–151 Headcount reduction, 643–646 Health care expenditures, 16, 471–472 Health insurance comparison of options in, 473 consumer-directed, 474 cost control strategies for, 475–476 customer-driven, 435 delivery systems for, 472–475 employer-provided, market-based, 435 types of, 435–436 Health Insurance Association of America, 476 Health Insurance Portability and Accountability Act (HIPAA) of 1996, 465 Health maintenance organizations (HMO), 472–474 Health reimbursement arrangements (HRAs), 474–475 Health savings accounts (HSAs), 436, 475 Hewlett-Packard, 480 Hierarchical pay structure, 84–86 Highly compensated employees, 601 High-performance work systems (HPWS), 45 Hit rates, 191 Holiday pay, 478, 525–526 Home Depot, 386 Hon Hai Precision Industry Co., Ltd., Horn error, 388 Housing, expatriate, 568 HR strategy compensation strategy and, 49–52, 55 explanation of, 45–46 internal pay structures and, 81–82 Hughes v Microsoft, 606 Human capital, 81 Human capital theory, 222, 223 Human resource planning system, 464 Hyundai, 529 711 IBM, 14, 26, 44–45, 77, 103, 229, 236–237, 254, 323, 445, 504, 548–549, 574–577, 602 IG Metall, 548 Improshare, 357 Incentive effect, 11–12 Incentive plans explanation of, 4–5, 15, 476 individual, 340–345 long-term, 15, 360–363, 493–494 reverse, 340 team, 22–23, 345–360 Incentive stock options, 494 Increased Oversight of Financial Industry (2010), 596 Independent Compensation Committees, 595 Independent contractors, 605–607 Indirect compensation, 450 Individual incentive plans advantages and disadvantages of, 343–344 categories of, 342–343 examples of, 344–345 explanation of, 340 features of, 340–341 group incentive plans vs., 351–352 Individual incentives, 315 Individualism-collectivism, 544, 545 Individual retirement accounts (IRAs), 468 Information, storage and recall of, 389 Infosystems, 535 Innovators, 43 Institute of Management and Administration (IOMA), 317 Institutional theory, 89 Instrumentality, 310 Insurance, unemployment, 463–474 Internal alignment compensation strategies and, 57, 72–74 compliance and, 91–92 consequences of, 91–92 content and value and, 75, 77 cultures and customs and, 80 differentials and, 75, 76 economic pressures and, 78–79 effects of, 90–91 efficiency and, 91 egalitarian vs hierarchical structures and, 84–86 employee acceptance and, 83 equity theory and, 86–87 miL2949x_sndx_706-718.indd Page 712 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles 712 Subject Index Internal alignment—Cont explanation of, 21–22, 72 external stakeholders and, 79–80 fairness and, 91 government policies, laws and regulations and, 79 hierarchical vs egalitarian structures and, 84–86 HR policies and, 81–82 human capital and, 81 institutional theory and, 89 internal labor markets and, 82 number of levels and, 75 organizational strategy and, 80–81 pay structures change and, 83–84 structures and, 187, 189 tailored vs loosely coupled structures and, 84 tournament theory and, 88–89 work design and, 81 work flow and, 73–74 Internal equity See Internal alignment Internal labor markets, 82 Internal Revenue Service (IRS), 606, 607 Internal structures bias in, 192–193 business- and work-related, 135 creation of, 101–102 external market rates combined with, 280, 281 job evaluation and, 137, 138 International compensation background of, 536–538 centralized or decentralized pay and, 539–540 comparison of, 555 cost of living and purchasing power and, 552–555 culture and, 543–547 expatriate compensation and, 565–574 (See also Expatriate compensation) labor costs and productivity and, 549–552 managerial autonomy and, 548–549 national systems and, 555–564 ownership and financial markets and, 547–548 regulation and, 540–543 social contract and, 538–543 strategic market mind-set and, 564–565 trade unions and, 547 trends in, 534–536 International Ladies’ Garment Workers’ Union, 627 International Society for Performance Improvement, 313 Internet benefit administration over, 445 publicly available compensation data on, 262, 263 Interval scaling, 152 Japan base pay in, 556–557 benefits and allowances in, 558–559 bonuses in, 558 comparing systems in Germany, United States and, 560–562 compensation strategies in, 12–13, 555–556 evolution and change in, 562–564 unpaid overtime in, 602 Jet Propulsion Laboratory, 105 Job analysis acceptability of, 123 benefits and drawbacks of, 119–120, 124 conventional, 105 currency of, 123 data collection methods for, 112–115 employee data for, 107–110 explanation of, 100, 103 function of, 104 globalization and, 120–122 individuals with disabilities and, 110–111 job-based approach to, 103–104 job data for, 105, 107 job descriptions and, 116–119 level of, 111–112 for point plans, 145 procedures for, 104–106 reliability of, 122–123 usefulness of, 123–124 validity of, 123 Job analysis questionnaire, 112, 113 Job-based structures explanation of, 77, 135, 177 features of, 194 internal alignment and, 187, 189 job evaluation and, 135–136 (See also Job evaluation) reliability of, 189–190 Job classifications, 611 Job descriptions example of, 102–103 explanation of, 100, 116 generic, 116 for managerial/professional jobs, 116–118 verifying accuracy of, 117, 119 Job evaluation appeals/review procedures for, 156, 157 assumptions underlying, 137 content and, 136 design process for, 156–157 explanation of, 135–136 function of, 158 individuals involved in, 155 job value and, 136 online, 155 process of, 137–140 resulting internal structures and, 157–158 single vs multiple plans for, 138–139 structure and, 157–158 technical and process dimensions of, 137 Job evaluation form, 153 Job evaluation methods choice of, 140 classification, 142–144 comparison of, 140 point, 144–155 ranking, 141–142 Job family, 104 Job hierarchy, 622 Job performance See Performance Jobs benchmark, 139–140, 263–265, 278–279 data on, 105, 107 entry, 82 Job specifications, 101, 116 Job structure, 288 Johnson and Johnson, 50 J.P Morgan, JPMorgan Chase & Co., 599 Justice compensation and, distributive, 83, 324 procedural, 83 “Just wage” doctrine, 80 Kellogg Company, 445–446 KISS principle, 507 Kraft Foods, 347 miL2949x_sndx_706-718.indd Page 713 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index Labor marginal product of, 216–217 marginal revenue of, 216–218 segmenting source of, 225–226 Labor costs average cast compensation and, 647–648 benefit control and, 646–647 hours worked and, 646 international comparisons of, 549–552 management of, 641–642 number of employees and, 642–646 Labor demand explanation of, 216 government and, 593 pay level and, 223 theories of, 218–219 Labor legislation, 548 See also Government regulations; specific legislation Labor markets external and organizational factors affecting, 82–84 external competitiveness and, 213, 215–218 internal, 82 operation of, 215–216 types of, 213 Labor supply explanation of, 218 government and, 593–594 pay level and, 223 segmented, 225–226 theories of, 222–223 Labor unions See also Collective bargaining agreements child labor and, 604 comparable worth and, 627–628 decline in, 517–518 earnings gaps and membership in, 624 employee stock ownership plans and, 527 executive compensation view by, 498 gain-sharing plans and, 528 international trends in, 547 lump-sum awards and, 338–339, 527 membership trends in, 517, 547 pay-for-knowledge plans and, 527–528 Labor unions—Cont present state of, 517–518 profit-sharing plans and, 528–529 spillover effect and, 518, 522 wage determination impact of, 52, 518–526 Lag pay-level policy, 234–235 Lead pay-level policy, 234 Legal insurance, 479 Lehman Brothers, Leniency error, 388 Lenovo, 546 Level problem, 346 Life insurance, 471 Lifetime employment, 562 Lilly Ledbetter Fair Play Act of 2009, 595, 613–614 Lincoln Electric, 44, 344, 345 Litton Industries, 345 Living wage provisions, 604–605 Local country nationals (LCN), 566 Localizer strategy, 564 Location effects of, 207–208 pay differences by, 259 Lockheed Martin, 76, 77, 90–91, 142 Long-term disability plans (LTD), 477, 478 Long-term employment, 562 Long-term incentive plans (LTIs) for executives, 493–494 explanation of, 15, 360–362 Long-term vs short-term orientation, 545 Lump-sum awards expatriates and, 572 explanation of, 315 labor unions and, 338–339, 527 Maintenance Act of 1973, 441 Managed competition plans, 436 Management See Compensation management Management by objectives (MBO), 379–380 Manufacturing sector, 549–552 Mapping, compensation strategy, 52–54 Marginal productivity, 79 Marginal product of labor, 216–217 Marginal revenue of labor, 216–218 Marginal revenue product, 218 Market-based health care, 435 Market data, 617–618 713 Market pay line construction of, 276–278 explanation of, 269, 276–277 regression analysis to calculate, 280 Market pricing business strategy and, 289–290 explanation of, 141, 288–289 Markets See Relevant markets Masculinity-femininity dimension, 544, 545 Maturity curves, 502–503 McDonald’s Corporation, 84, 385 Medtronic, 16, 19, 50, 253, 285 Mental Health Act of 1997, 595 Menu-driven plans, 436 Merit grids, 399 Merit increase guidelines, 651 Merit pay explanation of, 14–15, 315, 336–338 guidelines for, 398–400 for teachers, 52 unions and, 524–525 in various countries, 564 Merrick plans, 342, 343 Merrill Lynch, 5, 38–40, 44, 59–60, 73–74, 260, 538, 599 Metrics, performance, 372–373 Mexico, Microsoft, 40–41, 53, 54, 255, 256, 606 Minimum-wage legislation, 597–598 Minnesota Life Insurance, 444 Modified balance sheet approach, 571–572 Motivation compensation and, 11, 317–322 components of, 308 tournament theory and, 88–89 Motivation theories overview of, 308 types of, 309–311 Multinational corporations (MNCs) compensation trends in, 538 earnings gaps in, 625 statistics related to, 534–535 Multinational responsibilities, compensable factors and, 147, 148 Multiskill system, 170–171 My Secret Life on the McJob (Newman), 325 miL2949x_sndx_706-718.indd Page 714 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles 714 Subject Index Nabisco, 305 National Compensation Survey (NCS), 149 National culture, 545–547 National Electrical Manufacturers Association (NEMA) plan, 148, 151 National Foundation for the Arts and Humanities Act, 608 National Labor Relations Act, 660 National Labor Relations Board, 430 National Metal Trades Association (NMTA) plan, 149, 152 National systems See also Germany; Japan evolution and change in, 562–564 explanation of, 555 German traditional, 559–560 Japanese traditional, 555–559 strategic comparisons of, 560–562 websites for information on, 562 Nationwide v Darden, 606 NCR, 442 Needs hierarchy (Maslow), 308, 309 Netflix, 51, 238 Nike, 492 Nominating Directors (2010), 595 Nonexempt employees, 52, 604 Nonqualified stock options, 494 Nordstrom, 303–304 Northrup Grumman, 138–139, 345 Nucor Steel, 4, 38–40, 44 Nursing Relief for Disadvantaged Areas Act of 1999, 608 Objectives, 12 Observation, errors in performance, 388–389 Occupational Information Network (O*NET), 116, 117, 156 Occupational Safety and Health Administration, work hours and, 603 Occupations earnings gaps and, 620–623 wage differentials based on, 524 Office of Federal Contracts Compliance Programs (OFCCP), 614–616 Office of Personnel Management (OPM), 338 Offshoring explanation of, 120 labor cost savings and, 229–230 susceptibility to, 120, 121 Older Worker Benefits Protection Act, 644 On-call employees, 603 O*NET See Occupational Information Network (O*NET) Organizational culture See also Culture compensable factors and, 147 compensation strategy and, 14 internal alignment and, 80 national differences in, 545–547 Organizational strategy competencies and, 180 internal alignment and, 73 job evaluation and, 138 pay level and, 227–228 performance and, 303–308 for sales professionals, 506–507 Organization Resources Counselors’ International, 565 Organizations centralized or decentralized, 666–667 ethical guidelines in, 20–21 factors influencing pay level decisions in, 226–228 global variations in ownership of, 547–548 managerial autonomy in, 548–549 as network of returns, 17 pay structure and structure of, 80–81 survey data for, 265, 267 technology use and, 226 varying compensation strategies within, 41–42 Outsourcing of benefit administration, 446 statistics related to, 6, 551 as viable alternative, 668 Outsourcing specialists, 81 Overtime pay in collective bargaining agreements, 522–523 government regulation of, 52, 599, 602 in Japan, 602 Paid-time-off (PTO) plans, 477–479 Paired comparison method, 141–142 Paired-comparison ranking, 376 Parent-country nationals (PCNs), 565 See also Expatriate compensation; Expatriates Part-time employees, 525 Pay discrimination compensable factors and, 148 determination of, 624–625 dissimilar jobs and, 617–618 Equal Pay Act and, 610–613 example of, 591–592 explanation of, 608, 610 legislation and regulations addressing, 609 Pay equity, 610, 618 Pay-for-knowledge plans, 527–528 Pay forms benefits as, 16–17 cash compensation as, 14–15 cost-of-living adjustments as, 15 explanation of, 208 incentives as, 15 long-term incentives as, 15 overview of, 13–14 relational returns from work as, 17 total earnings opportunities as, 17 variable, 15 Pay-for-performance plans compliance and, 325 design of, 323–325 efficiency and, 323–324 emphasis on, 22 equity and fairness and, 324–325 explanation of, 335–337 incentives and, 15 long-term, 360–363 merit guidelines for, 398–400 merit pay, 14–15, 337–338 promotional increases as tool for, 401 short-term plans, 337–345 team incentive, 345–360 Pay-level policies compliance and, 241–242 for different employee groups, 235 effects of, 232 efficiency and, 240–241 fairness and, 241 lag, 234–235 lead, 234 pay with competition and, 232–234 Pay levels adjustments to, 254 compensation theories and, 232 cost controls and increase revenues and, 208–210 miL2949x_sndx_706-718.indd Page 715 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index Pay levels—Cont determining externally competitive, 253 employee preferences and, 227 employee recruitment and retention and, 210, 212–213 employer size and, 226–227 explanation of, 208 industry and technology and, 226 organization strategy and, 227–228 Pay mix adjustments to, 254 cost controls and increase revenues and, 208–210 employee recruitment and retention and, 210, 212–213 as policy decision, 22–23 Pay-mix strategies compliance and, 241–242 efficiency and, 240–241 employer of choice/shared choice as, 236–238 fairness and, 241 pie charts for, 238–239 types of, 235–236 Pay model compensation objectives of, 19–21 employee contributions and, 22–23 ethics and, 19–21 explanation of, 18 external competitiveness and, 22 illustration of, 70, 206 internal alignment and, 21–22 management and, 23 pay techniques and, 23–24 strategic compensation and, 46–48 Pay objectives, 21 Pay-policy line, 281–282 Pay satisfaction determinants of, 234, 236 explanation of, 228 Pay secrecy, 660–661 Pay structure adjustments to, 254, 288 change in, 83–84 criterion, 154 differentials and, 75, 76 explanation of, 72, 288 hierarchical vs egalitarian, 84–86 levels of work and, 75 variations in, 23 work content and value and, 75 Pay surveys broad banding and, 285–288 challenges related to, 268–269 combining internal structure and external market rates for, 280, 281 constructing market pay line for, 276–278 data elements for, 266 data updates for, 276 data verification for, 269–274 grades and ranges and, 282–285 individuals involved in, 260 jobs to include in, 263–265 number of employers to include in, 260–261 online, 262 organization data for, 265–267 pay-policy line and, 281–282 publicly available data for, 261–262 setting pay for benchmark and non-benchmark jobs for, 278–279 statical analysis techniques for, 274–276 tips to get most out of, 261 total compensation data for, 267–268 value of, 262–263 Pay systems competency-based, 89 exporter strategies for, 564–565 in Germany, 559–564 globalizer strategies for, 565 in Japan, 555–564 localizer strategies for, 564 social contract and, 539–540 Pay-with-competition policy, 232–234 Peers, as performance raters, 385 Pension Benefit Guaranty Corporation (PBGC), 469 Pension plans See Retirement plans Pension Protection Act of 2006 (PPA), 469–470 Percentiles, 275–276 Performance effect of variable pay on, 337 explanation of, 375 influence of compensation on, 319–322 organizational strategy and, 303–308 tournament theory and, 88–89 715 Performance appraisal errors in actual evaluation, 389–390 criterion contamination as, 387–388 explanation of, 387 list of common, 388 in observation, 388 storage and recall, 389 Performance appraisal formats essay format for, 381 evaluation of, 381–384 management by objectives approach to, 379–380 ranking formats for, 375–376 rating formats for, 376–379 Performance appraisals background of, 372–373 balanced scorecard approach to, 349–350, 375 at Burger King, 401–403 compensation decisions based on, 396–400 equal employment opportunity and, 392, 394–396 evaluation of formats for, 381–384 formats for, 375–381 gender and, 388–389 key elements for, 391–392 metrics for, 372–373 promotion resulting from, 401 strategies for, 374 trends in use of, 534 Performance-based pay effects of, 57 ethical issues and, 654 international trends in, 535 in Japan, 563 return on assets and, 322 Performance-dimension training, 390, 391 Performance interviews, 393–394 Performance measures, group, 347, 348, 351 Performance plans, 363 Performance raters customer as, 385–386 information processing by, 387–390 peers as, 385 selection of, 384–386 self as, 385 subordinates as, 386 supervisors as, 384–385 training for, 390–391 Performance share/unit plans, 494 Performance-standard training, 390, 391 miL2949x_sndx_706-718.indd Page 716 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles 716 Subject Index Perquisites, 267, 495, 496 Personal care accounts (PCA), 475 Person-based structures acceptability and, 192 competencies and, 176–181 competency analysis and, 181–187 contrast of approaches to, 194–195 explanation of, 77 internal alignment and, 187, 189 internal structures bias and, 192–193 reliability of job evaluation techniques and, 189, 191 skill analysis and, 172–176 skill plans and, 168–172 validity and, 191–192 Pfizer Pharmaceutical, 408–417, 464 Phantom stock options, 494 Pie charts, 238–239 Pizza Hut, 375 Planned pay-level rise, 648 Point methods, 144–145 Point-of-service plan (POS), 474 Point plans applied to nonbenchmark jobs, 154–155 communicating plan and training users for, 154 conducting job analysis for, 145 determining compensable factors for, 145–151 developing online software support for, 155 job analysis for, 145 scaling factors for, 151–153 selecting criterion pay structure for, 154 weighing factors for, 153–154 Policy-capturing approach, 154 Politics, compensation strategy and, 50–51 Portability, 469 Portal-to-Portal Act, 603 Position Analysis Questionnaire (PAQ), 108–109 Power distance, 544, 545 Praxair, 347 Preferred provider organizations (PPO), 473, 474 Pregnancy Discrimination Act of 1978, 594 Present-value perspective, 17 Prevailing wage laws, 608 Price-fixing lawsuits, 260 Priceline, 213 PricewaterhouseCoopers (PWC), 77 Probationary periods, 446 Procedural justice, 83 Procter & Gamble, 430 Product demand, 223 Productivity international comparisons of, 549–552 labor cost savings and, 230 marginal, 79 Profit-sharing plans explanation of, 316, 357–358, 467 labor unions and, 528–529 Prometric Thomas Learning Call Centers, 339 Promotion-based pay, 655 Purchasing power, 552–555 Qipro, 535 Qualified deferred compensation plans, 467 Quantitative data collection, 112, 114 Quartiles, 275, 276 Quoted price market, 213 Range design of pay, 282–285 explanation of, 253 midpoints, minimums and maximums of, 283–284, 654–655 overlap in, 284–285 Rank and yank, 390 Ranking, 141–142 Ranking formats explanation of, 375 types of, 376 Rate determination, 341, 342 Rater-error training, 390 Rating formats behaviorally anchored rating scales as, 377, 378, 408–417 descriptors in, 377 essay, 381 example of, 408–417 explanation of, 376–377 management by objectives as, 379–380 standard, 377 Recency error, 388 Recruitment, 210–213 Red circle rates, 655 Reduction in force (RIF), 643, 644 Reengineering, 26 Regression analysis, 277–280 Regulations See Government regulations Reinforcement, 311 Relational returns, 13, 17 Relevant markets explanation of, 228–229, 255 fuzzy markets and, 259–260 by geographic and employee groups, 258 globalization of, 229–231 method to select, 255–259 Reliability of job analysis, 122–123 of job evaluation techniques, 189–191 Rent, 221 Reopener clauses, 526 Research evaluation of, 26–27 usefulness of, 25–26 Reservation wage, 222–223 Restricted stock plans, 494 Retail electronics industry, 27–28 Retirement plans background of, 465–466 defined benefit, 447, 466 defined contribution, 447, 466–468 underfunding of, 430 Return on investment (ROI), 56 Reverse discrimination, 612–613 Reverse incentive plans, 340 Rewards/reward systems employee fit and, 317 extrinsic, 320 union activity and, 518 Risk sharing plans, 316 Rowan plans, 343 Rucker plans explanation of, 355–356 implementation of, 356–357 Scanlon vs., 357 Russia, 535, 536 Salaries bottom-up control of, 652–653 for expatriates, 567–568 expenditures for, explanation of, 14 top-down control of, 648–651 miL2949x_sndx_706-718.indd Page 717 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles Subject Index Salary.com, 262, 263, 292 Salary continuation plans, 476 Sales professionals average salary, 505 compensation for, 505–508 competitor strategies and, 508 conflicts faced by, 489 economic environment for, 508 FLSA exemptions for, 601 market maturity and, 507 nature of, 506 organization strategy for, 506–507 products and, 508 Sales value of production (SVOP), 355 Sam’s Club, 9, 10 Sarbanes-Oxley Act of 2002, 595 SAS Institute, 41, 44–46, 53, 54, 429 Scaling, 145, 151–153 Scanlon plans explanation of, 355 implementation of, 356–357 Rucker vs., 357 Schultz v Wheaton Glass, 611 Scientists, 501–505 Sears, 343 Sears Holdings, 468 Securities and Exchange Commission (SEC), 498 Securities and Exchange Commission (SEC) rule of 2006, 595 Securities Exchange Act of 1934, 594 Self, as performance raters, 385 Self-determination theory (SDT), 312 Self-funding plans, 363 Seniority increases, 396 Service Contract Act, 608 Severity error, 388 Shanghai Bank, 535–536 Shanghai Shenyingwanguo Security Company, 535–536 Shared choice, 237–238 Sherman Act, 260 Shirking, 220 Short-term disability (STD), 477 Signaling, 219, 221–222 Six Sigma, 667 SK Holdings, 41 Skill analysis certification methods for, 173, 175 explanation of, 172 information to collect for, 172–173 involvement in, 173 Skill-based structures analysis decisions and, 172–176 explanation of, 169, 177, 318 features of, 194 outcomes of, 175–176 purpose of, 171–172 Skill block, 172 Skill development, 318–319 Skill plans breadth focus in, 168 depth focus in, 168 function of, 171–172 generalist/multiskill based, 170–171 specialist, 168–170 Skill requirements, 305 Slovenia, 545–546 Smith Barney, 599 Social context, compensation strategy and, 50–51 Social contract in Europe, 542–543, 644 function of, 538–539 in Japan, 563 legal/regulatory environment and, 540–543 pay systems and, 539–540 Social Security Act of 1935, 460–461 Social Security benefits, 460–463, 470 Social Security taxes, 461–463 Societal views, 5–7 Society of Human Resource Managers (SHRM), 668 Software compensation, 659 job evaluation, 155 Sorting effect, 11–12, 221–222 Southwest Airlines, 44, 210, 314, 363, 527, 669 Spaulding v University of Washington, 617 Special groups background of, 487 conflicts faced by, 489 explanation of, 488, 511 Spillover effect, 518, 522 Spillover error, 388 Spot awards, 340 Springfield Remanufacturing, 664 St Luke’s hospital, 225 Standard hour plans, 342 Standard rating scale, 377, 378 Starbucks, 119 Statistical analysis, 273–276 717 Stock appreciation rights, 494 Stockholders executive compensation and, 498 view of compensation, 7–9 Stock ownership plans, 349, 362–363 Straight piece-work system, 342 Straight ranking method, 376 Strategic fit, 57 Strategic perspective, 42 Strategies See also Compensation strategies choices in, 42–43 explanation of, 42 HR, 45–46 stated vs unstated, 47–48 Subordinates, as performance raters, 386 Success-sharing plans, 315 Sullivan & Cromwell, 195–196 Supervisors compensation strategy for, 488–489 conflicts faced by, 489 as performance raters, 384–385 Supply chain analysis, 119 Supreme Court, U.S., 606, 611, 613, 617 Surplus value, 79 Survey leveling, 265 Surveys See also Pay surveys benefits of, 255 design of, 260–268 explanation of, 253 interpreting results of, 268–280 online, 262 purpose of, 254–255 Tacit work, 168 Tally sheet, 498 Tariff agreements, 559 TARP See Troubled Asset Relief Program (TARP) Task data, 107, 108 Tata Consulting Services, 535 Tax equalization, 568 Taxes expatriates and, 568 reform in 1980s, 441 Social Security, 461, 462 Taylor plans, 342 Team incentive plans advantages and disadvantages of, 350 explanation of, 22–23 individual incentive plans vs., 351–352 miL2949x_sndx_706-718.indd Page 718 11/30/12 11:11 PM user-f502 /201/MH01833/miL2949x_disk1of1/007802949x/miL2949x_pagefiles 718 Subject Index Teamsters Union, 517 Technology, pay level and, 226 Temporary employees, 525 Tenneco, 446 Third-country nationals (TCNs), 566, 572 See also Expatriate compensation; Expatriates 360-degree feedback, 185, 384 3M, 84, 112, 113, 115, 182, 183, 252, 285, 360, 567 Tiered networks plans, 436 Title VII, Civil Rights Act of 1964, 592, 594, 609, 613, 617 Topped out, 176 Total compensation employee benefits and, 437–438 explanation of, 13, 213, 214, 641 international comparisons of, 549 Total compensation surveys, 267–269 Total pay model, 555 Total reward system, 313, 314 Tournament theory, 88–89 Toyota, 534, 555 Traditional time-off plans (TTO), 479 Training, performance rater, 390–391 Transactional work, 168 Treasury Department, 539 Troubled Asset Relief Program (TARP) effects of, 60, 539 function of, 5, 595 TRW Automotive, 175–178 Tungsram Electric, 535 Turnover See Employee turnover Turnover effect, 649 See also Employee turnover Two-factor theory (Herzberg), 308, 309 Two-tier pay plans, 521–522 Tyson, 493–494 UBS Financial Services, 599 Uncertainty avoidance, 544, 545 Unemployment benefits, 543, 544 Unemployment insurance, 463–464 Unions See Labor unions United Auto Workers (UAW), 52, 518, 521, 527–528, 627 United Technologies, 41 University of California at San Francisco, 340 USAir, 210 Use value, 77 Utility, 244 Utility analysis, 244–246 Utility theory, 220 Vacation pay, 478, 525 Valence, 310 Validity of job analysis, 122, 123 of job evaluation techniques, 191–192 Valuation discrimination, 610 Value compensation strategy and, 50 exchange, 77 explanation of, 75, 76 job, 136 use, 77 Value-added analysis, 657, 658 Value chain analysis, 667 Variable pay base vs., 336 explanation of, 15, 656 performance and, 337 trends toward, 534 Variable-pay plans, 349–350 Variation, 275–276 Vesting, 469 Vicious circles, 58–59 Vietnam, labor costs in, 549 Virtuous circles, 58–59 Vision care, 477–478 Vizcaino v Microsoft, 509, 606 Volkswagen AG, 529, 548 Vote on Executive Pay of 2010, 595 Wage bargaining, 539–540 Wage differentials experience/merit, 524–525 geographic areas and, 525 occupation and, 524 part-time and temporary employees and, 525 unions and, 522–523 Wages base, 14, 213, 494 components of, 314–316 deferred increases in, 526 expenditures for, government-defined prevailing, 608 living, 604–605 minimum, 597–598 reservation, 222–223 union impact on, 52, 518–526 Wages criteria bias, 193 Wagner Act of 1935, 430 Walgreens, 366 Walmart, 6, 9, 10, 14, 84, 602, 613 Walsh-Healey Public Contracts Act of 1936, 594, 608 West Publishing, 260 Whole Foods, 19, 21–23, 46–47, 50, 51, 159–163, 237–238, 664 Women See also Gender comparable worth and, 625–628 job evaluation and, 192–193 occupations and, 620–622 pay discrimination, 591–592, 608–614 performance appraisals and, 388–389 Work tacit, 168 transactional, 168 Work design, 81 Worker Economic Opportunity Act of 2000, 595 Workers’ compensation, 459–460 Work flow competencies and, 180 explanation of, 73–74 job evaluation and, 138 Work hours labor costs and, 646 regulations related to, 602–603 Work/life balance benefits, 16, 440 Works Council, 542 WorldatWork, 668 Xerox, 346, 347, 396–397 Xerox Achievement Award, 346 Zia Company, 394 Zones, 286 ElEvEnth Edition as wEll as instructor and studEnt rEsourcEs, visit coMpEnsation, 11th Edition, onlinE at www.MhhE.coM/Milkovich11E compensation For MorE inForMation aBout this Book ElEvEnth Edition JErry nEwMan Barry GErhart MD DALIM 1215015 11/5/12 CYAN MAG YELO BLACK Milkovich | nEwMan | GErhart GEorGE Milkovich ... 06/12/12 3:21 PM user-f499 /201/MH01590/bar26215_disk1of1/0073526215/bar26215_pagefiles COMPENSATION, ELEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc.,... 2007” by The Wall Street Journal Newman is also co-author with George Milkovich of earlier editions of Compensation, a best-in-class-book for McGrawHill since 1984 His article, “Compensation Lessons... 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